Mortgage brokers comes together on ASIC proposals
Representatives from the mortgage industry have met to discuss a collective response to ASIC’s report on mortgage broker remuneration.
In a first for the mortgage industry, the Australian Bankers’ Association (ABA), the Mortgage and Finance Association of Australia (MFAA), the Finance Brokers Association of Australia (FBAA) and the Customer Owned Banking Association (COBA) held a discussion forum with key industry participants including bank and non-bank lenders, aggregators and brokers to debate reform and self-regulation.
The forum, held in Sydney, was recognised by participants as an opportunity for the industry to discuss key issues in response to ASIC’s proposals for mortgage broking; the potential impact to aggregators and lenders; and the overlap with the Sedgwick Review.
While the participants have not revealed the nuance of what was discussed, the MFAA has previously stated that it will continue to work with ASIC and government on addressing issues in broker remuneration but has repeatedly outlined concerns about the Sedgwick Review.
“The ASIC review into broker mortgage remuneration was a positive outcome for brokers and was a strong affirmation of the value of brokers in driving competition and greater outcome for consumers,” MFAA chief executive Mike Felton told AB+F last month.
However, the MFAA expressed concerns around a number of recommendations in the Sedgwick report - initiated by the Australian Bankers’ Association (ABA) - particularly around the third-party channel.
According to the MFAA, the Sedgwick Review's proposed changes go significantly beyond those recommended by the ASIC report – including the removal of current incentives for mortgage brokers and potentially implementing a lender fee-for-service approach.
The ASIC Review of Mortgage Broker Remuneration did not advocate for an immediate ban on incentives and instead called for industry feedback on ways to improve the current standard commission model and move away from soft dollar commissions. The forum is seen by industry as a way to begin collating this feedback.
“This first meeting of the forum was an important step for the industry to work together on options for an industry based response to calls for changes in the mortgage industry,” said ABA Executive director – retail policy, Diane Tate.
“We have heard these calls to change incentives and governance arrangements and we look forward to working with the industry, in consultation with the government and subject to all competition law obligations, on reforms to support good customer outcomes.”
Mike Felton said the industry had to show it was serious about self-regulation.
“The MFAA sees this as a crucial step in the process of determining how we as an industry respond to the challenges of addressing ASIC’s proposals on broker remuneration and how we ensure the sustainability of our industry going forward,” he said.
“This meeting demonstrates that our industry is serious about self-regulation and has the maturity to work together across different stakeholder groups to effect the required change and ensure customer outcomes continue to remain front of mind.”
Peter White, executive director of the FBAA, added that everyone sitting around the table had a “clear view to support best practice and good consumer outcomes from this process, whilst supporting an industry sector that has positively delivered so many positive outcomes to the lending landscape over the past 27 years”.
COBA chief executive Mark Degotardi argued that brokers are a valued part of the mortgage market.
“We're keen to work with industry to ensure that this channel continues to work effectively for consumers,” he said.
Further discussions with forum participants will be held in the coming months, with all participants committing to work in consultation with Treasury and Government stakeholders on an industry-led response.